Are you in the process of hiring employees or engaging contractors in the Emirates? Whether you’re conducting recruitment activities in Abu Dhabi, Dubai, Sharjah, Ras al-Khaimah, Ajman, Umm al-Quwain, or Fujairah, it’s essential to familiarize yourself with the intricacies of payroll in the UAE. This can be a complex journey, considering the multitude of labor laws to comply with and the numerous payroll challenges to navigate. For those seeking to avoid such complexities, the option of outsourcing payroll services in the UAE is gaining popularity.
A reputable payroll service provider like Marzuna can take charge of the entire payroll process, freeing up your time to concentrate on building a skilled and accomplished team in the UAE and beyond. This strategic outsourcing approach offers a practical solution for businesses looking to simplify their payroll administration, allowing them to focus on their core business objectives.
Accustomed to managing payroll procedures in your home country? Then, the subsequent workflow will likely resonate with your experience. When you hire and compensate employees or contractors globally, you typically follow these steps:
Although this process may seem straightforward, complications arise when confronted with the intricacies of labor law and payroll regulations in the UAE.
Were you aware that employees in the UAE observe Fridays as a non-working day? Or that expatriates receive different treatment compared to UAE nationals in terms of social security contributions?
Before embarking on hiring your first employee in the UAE, there’s much to grasp. Need assistance in navigating the UAE payroll landscape? Look no further! Reach out to Marzuna to explore how we can handle it for you.
Dive into the essentials of managing a payroll process in the UAE. Here are some fundamental aspects:
Currency and Payment Frequency:
The official currency in the UAE is the United Arab Emirates dirham (AED). Employers typically pay their employees on a monthly basis, with payments usually processed on the last day of the month.
Working Hours:
The standard working week comprises 48 hours, with employees putting in up to 8 hours per day. In the UAE, the workweek typically spans from Sunday to Thursday, starting at 8 am, including a lengthy lunch break from 1 pm to 4 pm to avoid the hottest temperatures. During Ramadan, the working day is often shortened by two hours. However, companies within Free Zones may have different working hour regulations.
Overtime Rules:
Overtime pay is mandatory if an employee works beyond 48 hours per week, compensated at a rate of at least 125% of their regular salary. Additionally, if an employee works on a Friday, they are entitled to both additional paid time off and overtime pay for the hours worked.
Minimum Wage:
For UAE nationals, minimum wage varies based on the individual’s educational level:
There are no specified minimum wage requirements for expatriates working in the UAE.
Severance Pay:
Terminating an employee requires a minimum notice period of 30 days, or 14 days if the employee is in their probation period. Severance pay, if applicable, is calculated based on the employee’s years of service.
In specific cases not compliant with UAE labor laws, employees may be entitled to an additional three months’ full pay as compensation. The total severance pay, according to labor law, should not exceed a sum equivalent to two years’ salary.
Feeling overwhelmed? Marzuna’s payroll experts are well-versed in the intricacies of the UAE’s payroll process. Simplify your experience by starting payroll outsourcing for the UAE with us today.
As per UAE labor law, both employers and employees are obligated to contribute to the following aspects:
Employer Contributions:
– 12.5% – Social Security: This encompasses social security and a housing allowance, applicable to a maximum income of 50,000 AED. The government contributes 2.5%, with an increased contribution in Abu Dhabi where employers pay 15%, and the government pays 6%. Social security contributions extend to companies operating in Free Zones, excluding expatriates residing in the UAE from such contributions.
Employee Contributions:
Income Tax:
Both UAE nationals and expatriates employed in the UAE are not subjected to any income tax obligations.
Given the distinct differences between UAE payroll regulations and those of your home country, navigating these intricacies can be time-consuming. Streamline your processes and avoid unnecessary complexities by outsourcing your UAE payroll with Marzuna.
In the UAE, there are seven public holidays, constituting a total of 14 leave days, considering that some public holidays extend for multiple days.
Paid leave is a significant entitlement for employees in the UAE, with a minimum of 30 days granted per year after completing one year of service.
Employees are eligible for paid sick leave after three months of service, with the provision to take up to 90 days of sick leave annually, supported by a medical certificate within 48 hours of illness onset. Sick pay rates are structured as follows: 100% of regular salary for up to 15 days, 50% for 16 to 45 days, and any sickness exceeding 46 days in a year is unpaid.
Maternity leave in the UAE includes 60 days of paid leave for female employees, to be taken before or after their due date. The first 45 days are paid at 100% of the regular salary, followed by the next 15 days at 50%. Additionally, women can take up to 45 days of unpaid leave for medical conditions related to pregnancy or childbirth. Fathers are entitled to five days of paid leave within six months of their child’s birth.
Breastfeeding leave allows women returning to work within six months after childbirth to take one or two breaks per day, totaling a maximum of one hour, for breastfeeding.
Other leave allowances include five days of compassionate leave after the death of a spouse, three days for the death of a parent, child, sibling, or grandparent, and ten days of study leave for employees with at least two years of service, provided they are studying with an approved UAE educational institution.
Understanding your payroll obligations is crucial when employing workers in the UAE. Employers in the UAE bear the responsibility of withholding and submitting employee social security payments to the appropriate administration while ensuring timely salary disbursements. Failure to meet these obligations can result in stringent sanctions and fines for employers. If you are venturing into payroll management in the UAE, consider booking a Marzuna demo to gain a comprehensive understanding of your business’s expectations.
When it comes to payroll in the UAE, there are three primary approaches:
